ECUADOR Law and Practice Contributed by: Sebastian Corral Guevara, Miguel Pizarro Páez, María Fernanda Mencías Pérez, José Cisneros Pazmiño, Roque Bustamante Espinosa and Jorge Pizarro Páez, Flor Bustamante Pizarro & Hurtado
facilitation, market access, tariff and non-tariff barriers and related trade disciplines. Ecuador’s tariff regime has continued to evolve in recent years through the implementation of new trade agreements and the gradual reduction of tariffs appli - cable to a broad range of products covered by those agreements. At the same time, tariff protection con - tinues to be maintained for sensitive sectors of the domestic economy, particularly agriculture and certain manufacturing industries. The Organic Law for the Regulation and Control of Market Power ( Ley Orgánica de Regulación y Control del Poder de Mercado – LORCPM) establishes a man - datory and suspensory pre-merger control regime for certain economic concentration transactions. The regime applies to transactions resulting in a change of control, including, among others: • mergers; • acquisitions of shares, quotas or assets conferring direct or indirect control over another undertaking; • acquisitions of businesses or business units; • the creation of full-function joint ventures; and • any other transaction that results in the acquisition or transfer of control over an economic operator. The notification must be submitted to the Superin - tendency of Economic Competition ( Superintendencia de Competencia Económica – SEC) before the trans - action is implemented whenever either of the following alternative thresholds is met: 6. Competition Law 6.1 Merger Control Notification • the combined turnover of the parties in Ecuador during the preceding financial year exceeds the threshold established by the market power regula - tion board (currently approximately USD80 million, depending on the applicable economic sector); or • where the parties are active in the same relevant market, the transaction results in the acquisition or increase of a market share equal to or exceed - ing 30% of the relevant product or service market,
whether at the national level or within a defined geographic market in Ecuador. The notification obligation applies regardless of whether the transaction is structured as a share acqui - sition, asset acquisition, merger or joint venture. It may also apply to foreign-to-foreign transactions where the statutory jurisdictional thresholds are met and the transaction produces effects in Ecuador. The transaction may not be completed until the SEC has issued its clearance decision. Implementing a notifiable concentration without prior approval may result in administrative sanctions and the adoption of corrective measures under the LORCPM. 6.2 Merger Control Procedure The merger control procedure is conducted before the SEC under a mandatory pre-closing notification regime. The notification may be submitted by any of the parties involved in the transaction and must include the corporate, financial and market informa - tion required by the LORCPM and its implementing regulations. Once the filing is deemed complete, the SEC con - ducts an initial review (Phase I) to determine whether the proposed transaction is likely to raise competition concerns. If the authority concludes that the transac - tion is not likely to create or strengthen market power or otherwise significantly restrict competition, it will authorise the transaction during this initial phase. Where the SEC identifies potential competition con - cerns, the review proceeds to an in-depth investiga - tion (Phase II). During this stage, the authority carries out a more detailed assessment of the relevant mar- kets, the competitive effects of the transaction and any efficiencies put forward by the parties. The notify - ing parties may also propose structural or behavioural remedies to address the concerns identified by the SEC. The procedure concludes with a reasoned decision either: • authorising the transaction unconditionally;
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